NEIGHBOURHOOD: DRAFT COMPANY LAW OF PAKISTAN

Draft Companies Bill, 2015 of Pakistan [Pakistan Bill] was recently made available for public comments. Being global player and immediate neighbour, we in India may certainly have academic interests in this development. In this post, I will discuss 9 interesting ingredient of the stuff which has significant difference from Indian Companies Act, 2013.

Single Member Company

This is certainly akin to One Person Company (OPC) in India. Second proviso of Clause 82 of Pakistan Bill make it clear that issue of succession shall be settled either under the Islamic law of inheritance and in case of a non-Muslim members, as per their respective law.

The shares acquired by nominees by virtue of a nomination made by the deceased member or in the case of a Single Member Company by the sole subscriber shall be held as trustee.

General Meeting

Clause 137(4) Pakistan Bill make it possible for member of a company to participate in the meeting personally, through video – link or by proxy.

Quorum

In case of member present through video – link or by proxy, quorum shall be who represent not less than twenty-five percent of the total voting power, either of their own account or as proxies as per Clause 138 of Pakistan Bill.

Proxies

Clause 140 of Pakistan Bill prescribed that a proxy so appointed shall have such rights as respects (sic) speaking and voting at the meeting as are available to a member.

Resolution

Clause 186 of Pakistan Bill provide for passing of resolution by the members through circulation in case of a private company or public unlisted company with not more than fifty members by circulation signed by all the members for the time being entitled to receive notice of a meeting. Any such resolution shall be as valid and effectual as if it had been passed at a general meeting of the company duly convened and held.

Tenure of Directors

According to Clause 159(2) of Pakistan Bill, the first directors shall hold office until the election of directors in the first annual general meeting of the company.

According to Clause 163 of Pakistan Bill, a director elected under section 161 shall hold office for a period of three years unless he earlier resigns, becomes disqualified from being a director or otherwise ceases to hold office.

Appointment of Director

Detailed procedure for appointment is given in Clause 161 of Pakistan Bill.

The directors of a company having a share capital shall be elected by the members of the company in general meeting in the following manner, namely:-

(a) a member shall have such number of votes as is equal to the product of the number of voting shares or securities held by him and the number of directors to be elected;

(b) a member may give all his votes to a single candidate or divide them between more than one of the candidates in such manner as he may choose; and

(c) the candidate who gets the highest number of votes shall be declared elected as director and then the candidate who gets the next highest number of votes shall be so declared and so on until the total number of directors to be elected has been so elected.

In simple terms, for election of x number of directors out of y number of candidates, members shall vote among these y candidates and top x numbers of candidates shall stand elected.

Relatives

Clause 2 (58) define “relative”, with reference to any person, means his spouse or any of his dependent lineal ascendants or descendants.

However, for the purpose of disclosure of interests by directors, relatives are reduced. For this purpose “director’s relatives”, are:-

(a) the director’s spouse;

(b) the director’s children, including the step children; and

(c) the director’s parents.

Company Secretary

According to Clause 199 of Pakistan Bill, a public company must have a company secretary; possessing such qualification as may be prescribed.

For further interest, “company secretary” as per Clause 2(20), means any individual appointed to perform secretarial and other duties ordinarily customarily performed by a company secretary.